Atomic swap is a technology in view of smart contracts that enables the exchange of various cryptocurrencies without the requirement for a centralized market or different delegates. Otherwise called atomic cross-chain trading, atomic swaps include the trade of one cryptocurrency to another, even assuming that they are running in various blockchain networks.
The concept of an atomic swap was first portrayed in 2013 by Tier Nolan. It was introduced as a creative technique that would permit independent gatherings to swap cryptocurrency units straightforwardly from their addresses (or cryptocurrency wallets). In spite of the fact that Tier Nolan is much of the time recognized as the creator of atomic swaps, performing cross-affix peer-to-peer trades was at that point being talked about before that. In 2012, Daniel Larimer thought of a trustless exchange protocol called P2PTradeX, which is viewed as by quite a few people as the prototype of atomic swap technology.
One of the fundamental benefits of involving atomic swaps is security as users are not required to give or utilize their private keys anytime. One more benefit of such technology is connected with the way that there is no requirement for centralized exchanges, which brings about much lower costs (no deposit, withdrawal or trading fees).
Besides, atomic swaps are resistant to fraud since it is basically impossible for one party to extort the other. Technically talking, the technology depends on the Hash Timelock Contracts (HTLC) and hash capabilities. The HTLC smart contracts guarantee that the swap either occurs in totality or not by any stretch of the imagination.
All in all, the contracts are bound to cutoff times and require the participants to one or the other settle or cancel the atomic swap inside a predefined period of time. In this way, an atomic swap is possibly completed assuming the two players affirm its legitimacy. The confirmation is finished using cryptographic hash capabilities.
For instance, say Alice has 5 Bitcoins however needs to trade those for BNBs. Bob, who has BNBs will make the trade. By utilizing atomic swap technology, they are able to perform a peer-to-peer trade without depending on a confided in third-party. This basically means that two different coins, which are running on separate blockchains, can be traded with no obstruction.
- An atomic swap is a cryptocurrency exchange between two gatherings that wish to exchange tokens from various blockchains.
- Atomic swaps are useful on the off chance that you just have one cryptocurrency yet need to utilize one more in a transaction.
- Special wallets or exchange services are expected to conduct an atomic swap on the grounds that the technique is as yet being developed and refined.
Is an Atomic Swap Expensive?
The standard's ability to do atomic swaps is new, yet they don't yet create fees except if there are blockchain fees included.
What Are Cross-chain Atomic Swaps?
Cross-chain atomic swaps are cryptocurrency exchanges or trades between cryptocurrencies that utilization separate blockchains.
How Do You Do an Atomic Swap?
It is finished utilizing cryptocurrency wallets and Hash Timelock Contracts (HTLC), which uphold the exchange when the two players consent to it. In reality, there are a couple of atomic swap wallet suppliers and decentralized exchanges that can be utilized in a swap.